Crypto Lender Celsius Sued By Former Employee, Accused Of Being A Ponzi Scheme

Celsius promised exorbitantly high interest rates of up to 18 percent to customers on their crypto deposits.

Celsius, the US-headquartered crypto lender, has been sued by a former employee who accused the platform to use customer funds to manipulate the price of its eponymous proprietary token. The former money manager noted in his complaint that Celsius lost hundreds of millions of dollars by failing to hedge risk. Earlier this month, Celsius laid off around 150 employees — a quarter of its total workforce. Prior to that, in June, the platform blocked crypto withdrawals due to ‘extreme market conditions.’

The lending platform promised exorbitantly high interest rates of up to 18 percent to customers on their crypto deposits. As per a report by Bloomberg, founder Alex Mashinsky said Celsius was able to earn high rates itself in order to quell skepticism around the interest rates. 

However, as per the complaint filed on Thursday at a New York state court by KeyFi, Celsius was said to be struggling to cover the payouts and suffered “severe exchange rate losses.” KeyFi was founded by Jason Stone, a former Celsius money manager.

ALSO SEE: Celsius Crypto Lending Platform Lays Off 150 Employees: Find Out Why

In the complaint, Stone compared Celsius to a Ponzi scheme, alleging that the company had duped him out of potentially hundreds of millions of dollars in pay. The Celsius (CEL) token was priced at $0.7078, registering a 24-hour loss of 16.10 percent at the time of writing, as per CoinMarketCap data. 

ALSO SEE: Crypto Crash: Celsius Blocks Withdrawals Due To 'Extreme Market Conditions'

In June, Celsius paused all crypto withdrawals citing “extreme market conditions,” without announcing a timeline when they will resume.  

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